The internet's only blog on Health Insurance

January 31, 2008

While Governor Schwarzenegger’s health reform plan crashed and burned this week on the legislative highway, it confirmed once again that using mandates to achieve universal coverage is a failed model for reform.

The take home lesson: America’s health insurance industry is the problem. Any reform based on a prominent role for the industry precludes success, because the private health insurance industry is simply too bureaucartic and expensive. The administrative overhead in the current private system approaches 30%.

As the members of the California Senate also learned, it is financially impossible to expand coverage to the uninsured without also controlling costs. This means taking on the politically challenging task of ousting the insurance industry profiteers.

The failure of the mandate model in the six states that have tried it can be directly attributed to the Californian insurance industry. Each of these state reform efforts promised cost savings, but none included real cost controls. As the cost of health care soared, legislators backed off from enforcing the mandates or from financing new coverage for the poor. Just last month, Massachusetts projected that its costs for subsidized coverage may run $147 million over budget.

The “mandate model” for reform rests on political surrender: avoid challenging insurance firms’ stranglehold on health care while coercing the uninsured to purchase costly insufficient insurance policies. But it is economic nonsense. The reliance on private insurers makes universal coverage un-affordable.

It is ironic that what started out as a “politically feasible” alternative to the single payer bill SB 840 that was approved by both houses and then vetoed by the Governor turned out to have little political support when it came under scrutiny in the Senate.

It failed the “politically feasible” test because its supporters surrendered to the insurance industry in advance on cost control and then gave them a blank check in the form of millions of new customers.

State budget experts testified that the bill was fatally underfunded and could leave the state billions of dollars in the red. Having been down that road with the hastily enacted energy deregulation fiasco, proponents could only muster one yes vote out of eleven committee members.

The wisdom of the California Senate’s rejection of the mandate model of reform jump starts the national movement for an entirely achievable single payer medicare for all system.

California Health-Care Reform to Shift Focus

The demise of California's attempt at comprehensive health-care reform this week means that advocates of overhauling the health-care system will turn their focus back to Washington, several experts said yesterday, as an increasingly tough budget climate raises new questions about whether states can go it alone.

When the plan championed by Gov. Arnold Schwarzenegger (R) and state Assembly Speaker Fabian Nunez (D) went down to defeat in a legislative committee, so did hopes that successful reform in such a populous, influential state would bolster efforts elsewhere to cover more of the nation's 47 million uninsured.

While California is unique in some respects -- it has a diverse electorate, a high number of uninsured and a history of occasional budget crises -- experts said some of the same economic forces at work there threaten to slow or swamp similar proposals in other states. The slumping economy diminishes states' tax revenue at the same time that spending demands increase as more people seek help from programs such as Medicaid, which serves the poor. And, unlike the federal government, state governments have to balance their budgets every year.

"The failure of California's plan pushes the focus about expanding health insurance coverage even more strongly towards Washington," said Paul B. Ginsburg of the Center for Studying Health System Change, a nonpartisan policy-research group. "I've never believed that states would be able to go very far on their own because of their fiscal limitations. A state in an average year could be able to afford something, but once they get into a recession, they get into fiscal trouble."

Karen Davis of the Commonwealth Fund, a nonprofit research institution, said federal leadership is crucial because California and some other states' plans depend, in part, on expanding Medicaid and other public insurance programs to cover uninsured children who currently do not qualify. But the Bush administration has been unwilling to sign off on most such expansions. "The lack of federal support for state innovations has proved to be a major hurdle to reform," Davis said.

January 30, 2008

Schwarzenegger to Press Universal Health Insurance

California Gov. Arnold Schwarzenegger on Tuesday vowed to continue pressing for legislation that would provide health insurance to his state's uninsured, a day after a universal health care bill he supported died in a Senate committee.

Lawmakers had missed a golden opportunity for California to show the rest of the United States how to establish universal health care, Schwarzenegger said in a speech to the press club of the state capital.

"I'm as determined as ever," Schwarzenegger said. "The issue is not going to go away."

The bill had been closely watched across the United States because of California's size -- it is the largest state in the U.S. -- and the rising anxiety among Americans about the spiralling cost and lack of availability of affordable health care.

Nearly 47 million Americans, or 16 percent of the population, were without health insurance in 2005, according to the National Coalition on Health Care.

Health care has become a major issue in the presidential campaign, with leading candidates acknowledging that changes are needed, and some advocating plans to expand coverage.

Schwarzenegger, a Republican, and state Assembly Speaker Fabian Nunez, a Democrat, brokered the bill that would have given Californians without medical insurance some level of coverage by requiring they obtain it individually, through employers or via a state program.

January 23, 2008

California health bill to mean higher business costs

Businesses in Novato and throughout California will face increased costs, and many employees will be required to buy healthcare if ABX11, the current California healthcare reform bill and its companion ballot initiative, are approved by the legislature and voters, respectively. According to several business organizations, that could mean everything from reduced hours to layoffs for small and medium companies, the majority of Novato’s business community.

The legislation, backed by Gov. Schwarzenegger and State Assemblyman Fabian Nunez, was scheduled to be heard this week in the California Senate, and a ballot funding initiative may be put before voters November of this year. If approved, by 2010 businesses will be subject to a “pay or play” system, either providing employees health insurance, or paying a variable payroll fee into a general pool for employees’ healthcare.

Coy Smith of the Chamber of Commerce said his organization had not taken an overt position on the proposal, but was in general agreement with the California chamber, CalChamber, which recently signed a joint statement with other groups opposing it.

“We don’t (take positions) sometimes on statewide bills … we’ve taken a passive position supporting the California chamber,” said Smith. “(The bill) could potentially increase insurance costs to small and medium-sized businesses, and it would have less of an effect on large businesses.”

Smith said that due to economic conditions, the timing of the measure was wrong.

“Clearly the economy is not as strong today as it was a year and a half ago. It’s not a time to be placing additional expenses or requirements on businesses,” he said. “It could potentially mean cutbacks and lay-offs and hiring freezes. It’d have a negative affect on the economy.”

Representatives of the Independent Business Alliance declined to comment on the issue, but Downtown Business Association president Denise Athas said she felt the bill would do more harm than good.

“The part that will affect small businesses are the employer fees, and if they do raise them 1 to 6.5 percent of payroll, that would be absolutely detrimental to a small business,” said Athas. “I’ve been doing a sort of a rough survey of businesses and where they are today, and all businesses are being affected by the economy. Any additional expense to the employer will put a much greater burden on them.”

That's one reason to count on Perata to try to get the Senate to pass the universal health care plan backed by Assembly Speaker Fabian Nunez, D-Oakland and Republican Gov. Arnold Schwarzenegger.

Perata's job, however, has become far more difficult now that state Sen. Leland Yee, D-Daly City, has come out against the plan. Yee's opposition, announced Tuesday, means that two Democrats on the Senate Health Committee oppose the plan.

Opposition from those two Democrats leaves the bill one vote short in the Senate Health Committee, which will hear the bill on Wednesday. Republicans uniformly oppose the bill.

All is not lost for supporters, however. Perata may ask for a courtesy vote to get the bill on the floor or he may change the make-up of the committee to assure enough votes to move the bill along.

The plan promises to provide health insurance for 3.6 million Californians. It raises taxes on employers, hospitals and tobacco, requires Californians to buy insurance and provides subsidies for low-income residents.

The measure passed the Assembly quickly last December, but has been slowed down by Perata, who is waiting for a Legislative Analyst's report to see how it would impact the state's budget, which faces a $14 billion deficit.

Besides upholding his image among Democrats, Perata also needs to pass the plan to maintain close ties to Nunez and Schwarzenegger. The two leaders have staked much of their reputations on the health plan, hoping it will be a national model.

Perata, in turn, will need their help to pass his priorities, including a water bond.

January 20, 2008

California Health Care - A Mandate for Insurance or Healthy Choices?

Not many issues are being discussed about health care in the political arena, and for good reason. Other than the costs of defending the country (war?), health care is the leading economic burden to US citizens. The direction that is being taken to manage this problem is one that deals with economics instead of individual responsibility, the latter which would save thousands of hours of debate and many more billions (now trillions!) of dollars.

While putting more attention to thwarting the overweight and obesity epidemic, we now see the media covering individuals who are taking the "easy" but dangerous road to weight loss with a disregard for a healthy lifestyle, and claiming to help lead the fight against obesity (name omitted). While a voice for the consequences of poor food and lifestyle choices would be more suitable for someone who has chosen Gastric banding surgery as a last resort for losing weight, the wrong message is sent if this same voice is meant to teach people how to get healthy.

Americans don't need more surgical procedures or diet pills to solve their weight problems - it's just a new band-aid that perpetuates a growing problem.

As reported in Time Inc, "pharmaceutical companies are hoping to improve their bottom line by shrinking their customers' bottoms." Yet the bottom line is the first objective, never mind the side effects of new types of drugs that solve nothing, just delay the inevitable - a health crisis that will force change or face death.

When will the laziness cease? When will we wake up to the fact that there is no free lunch? When will we learn that we can't just keep creating ways that seem to make our life easier, when in fact just make us lazier? Hence, the diet pill pushers. Got weight? Here's a pill. We need to get back to the basic fundamental actions for good health - water, lean protein, fruits, vegetables, whole grains, and yes...exercise!

January 19, 2008

California health-care plan will

Republican governor Arnold Schwarzenegger has teamed up with a leading California Democrat, Assembly Speaker Fabian Nuñez, to draw up and promote a $14.4 billion health-care plan that is being touted as a possible model for the rest of the country.

The California Nurses Association, among others, opposes the bill, calling it a “boondoggle” for the insurance companies.

In December, the measure passed in the state assembly by a vote of 45 to 31. It will now go before the state senate. The sponsors hope to place it on the November ballot.

About 20 percent of California residents—6.6 million—lack medical coverage. Nationally the number is about 47 million.

News articles and commentators have noted the similarity between the California plan and the health-care proposals being promoted by Democratic presidential candidates Hillary Clinton, Barack Obama, and John Edwards.

The centerpiece of all these plans is to get everyone who lacks coverage to buy medical insurance or to enroll in Medicare or some other health plan. The California measure requires that residents of the state have insurance by 2010. Supporters of the plan say it’s like the requirement that all drivers who own cars purchase auto insurance.

For at least some of those who cannot afford this plan, the California bill provides for government subsidies and tax credits. A new bureaucracy is to be created that will figure out who does and does not have a low enough income to qualify for the financial aid.

In the plans proposed by Clinton and Edwards, the purchase of insurance is mandatory, with means-tested provisions for financial help and tax breaks to those who qualify. Obama says his plan would be mandatory for children only, but he would consider making it mandatory for all under certain conditions. All these presidential candidates say they would end tax cuts passed under George Bush to help finance their plans.

January 17, 2008

Health insurance companies could split over Democratic proposals

A Gallup poll in November showed nearly two-thirds of Americans think the government should be responsible for everyone having health coverage. The parties are clearly split on the issue.

In broad strokes, the Democratic candidates support a government-legislated solution; the GOP candidates favor a private-market approach. Democratic presidential contenders may ultimately find an unlikely ally: the same big health insurance firms they fight on the campaign trail.

Nearly 1,300 health insurance companies are united under the American Healthcare Insurance Providers, a Washington, D.C.-based association. This coalition represents both large and small insurance firms. The large companies may find benefits in the Democratic proposals, while the smaller companies see only burdens.

“It seems to me that the closer we get to actual legislation, the chances are that the coalition will fracture,” said Matthew Holt, a San Francisco-based health-care advocate.

The latest test of the coalition comes in California.

For now the AHIP union remains strong. California’s largest health insurance provider, Blue Cross/Blue Shield, has strongly opposed a health-care bill launched by Gov. Arnold Schwarzenegger, in spite of the bottom-line benefits they could reap from the bill. The bill mandates that individuals purchase health insurance, but prevents health insurance companies from denying coverage based on pre-existing conditions.

“It’s essentially a deal,” Holt said. The California proposal, if approved, would provide Blue Cross/Blue Shield a wave of new clients, he said. Smaller providers, however, would likely find themselves bypassed in the rush of Californians looking for health insurance, Holt predicted.

January 16, 2008

As the State Senate prepares to consider Assembly Bill X1-1, the compromise health care reform proposal hammered out by Governor Arnold Schwarzenegger and Assembly Speaker Fabian Nunez, the state's insurance agents urged lawmakers to make the fixes that will be necessary to achieve the goal of affordable health care coverage for all Californians.

In a letter to Senate President Pro Tem Don Perata and others, the California Association of Health Underwriters (CAHU) and the National Association of Insurance and Financial Advisors-California (NAIFA-California) encouraged Senators to take the time to get the reforms right.

"The bill before the State Senate is complicated and complex," said CAHU President Neil Crosby and NAIFA-California President Dennis P. Sunderman. "Comprehensive health care reform is too important, and the stakes for Californians are too high, to push this legislation through without needed changes."

The agent organizations identified several specific changes that are needed. One is a provision in the bill that segregates Californians who receive premium assistance in the form of tax credits into a state-run health insurance purchasing pool. Crosby and Sunderman note, "The state doesn't require food stamp recipients to shop only at government-run grocery stores. Similarly, Californians receiving tax credits to help pay premiums should not be forced to shop only at a government-run health insurance store."

The agents also urged Senators to define the "minimum health coverage" all Californians must obtain. "Without a definition of the minimum benefits package it's impossible to assess the impact this bill will have on individuals, employers, taxpayers, or on the state's precarious finances," Crosby and Sunderman said.

Agents recommended Senators thoroughly review the funding mechanisms in ABX1-1. They expressed concern that the funding sources identified in the bill, specifically an employer tax on payroll, will fail to keep up with state spending obligations for health care.